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Generations at War

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Now on BBC News - Talking Business Wood. We tend to take it for granted


that our children would be better off than we are, but that may be


about to end. Millennials, people born in the 1980s and 1990s, could


be the first generation in history to be worse off than their parents.


In this week's programme we take a look at generations at war.


Those able to work and provide for their children and generations to


come until they become too old to work and they themselves are looked


after, that social contract is the basis of civilisation all over the


world, it evens out wealth over lifetimes, and ensures that we


invest for the future rather than just consume today. Rising


productivity and technological advance has meant that each


successive generation has enjoyed better living standards than the


last. But that may be changing, according to the resolution


foundation, people born between 1945 and 1965 will urge an average of


?740,000 over their lifetime. The impact of the financial crisis


and the changing labour market means that millennials could earn just


?825,000, a fall of 1%. But it is not just about incomes, we spoke to


one father and daughter about their lives. I left university in 2015 and


because of this I am in just over ?40,000 worth of debt. I feel very


positive about the opportunities available to me and the career ahead


of me but I do feel like I am less advantaged in the generation before


me. Like a lot of people my age, I live in a shared house, the idea of


buying a house on my own is pretty unforeseeable, as a young person and


in today's market, finding a job, let alone a pension, can be hard. I


think I'm not only speaking for myself when I say that life can feel


a little precarious. My 1970s university education was free, at


203I was in a secure big company job with a good pension scheme and


bought my first modest house, and was paying off a mortgage, not


student debt. My grandad retired at 65 and live two years, IM62 and


hoping for a lot longer to enjoy life with a good pension, debt free


home and savings, plus free bus pass, prescriptions, winter fuel


allowance... I ask myself, do I really need it, when young people


are finding things so much tougher than I did. Here to discuss this are


three experts and three generations, a millennial, a senior researcher at


the research Boro solution foundation and author of the report


stagnation generation. Angus, a baby boomer, entrepreneur, and founder of


the intergenerational foundation. And a member of the so-called silent


generation. In between the world wars, president of the pensions


policy Institute and chief executive of the International longevity


Centre, which looks at demographics. Let me start with you, millennials,


your generation, they have seen the workplace change a great deal in the


last 20 years or so. How is that affecting the picture, this


disparity of wealth and opportunity that we are seeing between


generations. A lot of people like to focus on the impact of the financial


crisis and the downturn when they think about millennials in the


labour market. That really is quite important because this pay squeeze


in particular hit millennials just at the point where you expect your


paid to be rising quickly, getting into your jobs in your 20s you


expect quick progression and quick pay increases, the millennials were


unlucky to be coming into the labour market in those turbulent times. It


is not all about the financial crisis, there are more structural


things at play here. We might look to the rise in insecure work,


particularly for young people, and the slowdown in productivity growth,


which is really the key. That started before the financial crisis.


A mixture of cyclical changes connected to the downturn, and


structural changes in the way that we work and how much productivity we


have in our labour market seem to be hitting millennials in terms of


their current earnings and future prospects. Certainly true that the


environment is very different, not least because many young people now


come to the workplace already saddled with debt from educating


themselves. We have created a packhorse generation where many will


leave with ?50,000 of debt, and that has a very high rate of interest on


it, as high as six and a half percent, now almost 5%, which the


government is charging on the debt, that is paid out of income, when


they earn over 21,000 a year. The effect of it is that combined with


income tax and national insurance, there are marginal rate of tax, is


over 40%, 41%, it makes it very hard for them to save, and those student


debts will weigh on them for the whole of their working lives. I


would dispute the idea that the generations are at war because when


you talk about the older generation, particularly in Europe, but in the


UK more than anywhere else, that I know of, the older generation has no


wish to fight the younger generation. This is their children


and grandchildren. But it might be fair to say that the older


generation have set up a situation which is almost automatically


disadvantageous to young people but suits the older generation


themselves very well. You could say that but there is certainly an


adjustment needed because we were underspending terribly, certainly,


in the UK, on older people, huge pensioner poverty, really bad


poverty, and we dealt with that, to some extent, which is good. You are


not quite right to say there is no conflict, there is not conflict


between individuals but there is a conflict of interests and a conflict


over resources and our argument is not only in the UK but across


Europe, the older generation have taken more than their share. It is


reasonable for the younger generation, millennials in


particular, to complain and say it is not fair. Many people entering


the workplace, when I entered the workplace it was possible to buy


somewhere at least small, some sort of small property, for many young


people now, even if they are entering with a solid salary, Jihad


to achieve. Absolutely right, we have already talked about pay, but


it is probably in housing where the generational diversity is starkest,


a millennial at university is 80% less likely to own their home than a


baby boomer at the same age, that affect shortages in the supply of


housing, which has rapidly driven up costs. -- too -- that's hard to


achieve. People focus upon millennials, they mostly don't want


to do that, but the real challenges for the future, owning your home


represents stability, it represents a way of building up an asset, which


you can now depend upon in retirement. If we have asked the


more in this current young generation who gets to retirement in


many years' time without that assets to fall back on, that is a challenge


for those individuals but also for the state. What if we have to pay


the housing benefit or whatever the future of that looks like, the


housing costs of all these gnome non-homeowners. The current


challenge, the real concern is the future. To what extent, certainly in


Angus's generation it was very much part of the financial plan that you


would buy a house, a it off by the time you retire, so that would not


be one of the costs that when you retire, what do you feel warehousing


plays into this? So many older people are living in places that are


quite unsuitable, and what... In what way? As you get old because the


bathroom is upstairs, you are downstairs, stares make people fall


and go into hospital. They are damp very often. We need to attract older


people to specifically built housing for older people with care if they


need it, make this so attractive that people move, and then there is


plenty of housing which can be adapted very easily for the young.


And we need to get a very strong public message that retirement


housing with care for people who need it will make housing available


for the young. And make every local authority, have a duty to consider


all this, have a legal duty to do it, and build more housing for


retired... Angus? It is a solution to some extent but it is not just


building more housing and helping older people to have suitable places


to downsize, it is a question of freeing up the housing stock, at the


moment, to put it bluntly, the older generation are hogging the housing.


Perhaps not doing it deliberately, it is partly because they are living


longer, partly because there is not suitable places to downsize but


again, as in other areas, taking more than their share, and one of


the problem is they are over consuming... There is a limit to how


prescriptive you can be, people have a right to live where they want to


live, that is part of our society. In many European countries the local


property tax, the cost of housing is higher, that pays for social care


and other things, and that encourages people to downsize. We


need to build more housing and use more housing, effectively. The


fundamentals of downsizing in this country do not work at the moment,


and nor do the type of houses that we are building. And at what stage


of their lives. The other big-ticket item is the pension, this is the


other big area in which millennials are facing a challenge, harder


because they are earning less, but also because we have changed the way


we do pensions in this country, in the UK, but many baby boomers would


have been used to, particularly at their peak of earnings, getting into


a defined benefit pension, guarantees you a salary for the rest


of your retirement. Those have disappeared. All the FTSE 100


companies offer than 20 years ago, now maybe two or three. Millennials


are faced with a much less attractive pension saving vehicle,


and not necessarily earning enough to put into it. On housing and


pensions, what retirement looks like is much more unstable than parents.


Late in the programme we will be looking at how changes to


demographics and government policy has changed the balance of power


between the generations and even within families. But first,


representing Generation X, comedy consultant has this weeks talking


point. Are you Generation X or generation Y, perhaps a snowflake...


What generation are you? If pushed, I think I am Generation X, some


describe me as a millennial, one thing is for certain, I am not a


baby boomer. Apparently, wheat, at the end of the alphabet, are cheesed


off with baby boomers, with their retiring in their mid-60s and their


pensions and their comfortable trousers, but intergenerational


discussion, it's a lot more complicated than that.


To get the full historical picture, I went to the Epic Ireland Museum of


the Irish diaspora, it is all very well to find out about what previous


generations went through, what about the transfer of money between them?


Neil has been studying social mobility, associate professor of


economic history at the London School of economics, studying


intergenerational wealth mobility and researching it using rare


surnames. Surnames can be used to track families over most of the past


millennium. These surnames often had characteristics that enabled you to


detect what the status of the original surname holder was. We were


shocked when we first did this analysis, we got far higher


correlate is, a far more static society, and social mobility is


glacial, as opposed to rapid, as was originally thought by economists


when they estimated the numbers. Being here at the centre really


gives a sense of the tribulations of previous generations. While I got a


job when I came out of college, generation after me had to emigrate


again during the great recession, resume agree that generation after


that will have it good in the next boom but in general, you always


assumed that the people who come after you are slack-jawed ingrates


who don't know they're born, and you have to tell them about the time


before there were marble phones. -- mobile phone. Research in Ireland


suggests the relationship between generations may be more complex than


imagined. Alan Barrett, director of the economic and social research


Institute, explains the surprisingly finding from a long-term study


called the Irish longitudinal study on ageing, Tilda for short. You


often find that there is this notion of a working population paying taxes


to pay the health care for the older generation, at the public level, the


transfers go in that direction, but what was really revealing from Tilda


was the extent to which the private level, the transfer of money from


the older generation to the younger generation fastly exceeds anything


going in the other direction. All this talk of surnames has made me


think about my own past, who am I, really, and more importantly, is


there any intergenerational wealth that I can inherit? Let's take a


look. Would you look at that, my name means "king", turns out I am


royalty after all, the question is, where did all the money go? STUDIO:


You can find more official films on the website.


Our guests are still with me here in the studio talking about


generational divides. Sally, let's come to you and ask about this


business of the demographics, very simply we have more people retired


now, people living longer and living more healthily, the government has


responded to that by making sure they are able to have sufficient


income to do that, in more cases than before. That, in a way, one


might argue, is part of the problem. What has the government is done


right and wrong? The government has done right, almost a whole thing is


right, because we had shameful levels of pensioner poverty in the


UK. And what they have done is to make sure in the way pensions are


provided that this does not happen largely now. But, what has not


happened is because they have been protecting older people, bear in


mind there are so many more, we have to spend more money on them, because


they are a very important part of the population, but we need to look


again at the way that pensions have been protected in the light of


fairness across the generations. And, one of the ways the government


has worked is by maintaining the pension level regardless of how much


the national income is going up. They need to look again at that and


perhaps consider what is known as a triple lock in Britain, perhaps a


double lock, which would make sure from now on that state pensions keep


up with the rising costs and the costs of living generally. Can they


be more radical than that, you are saying they have been increasing the


state pension and that is good in terms of addressing pensioner


poverty but we have a huge number of pensioners who are wealthy in the


UK, probably 2 million over 60s who live in households with ?1 million


of assets, even if they are income poor, from a young person's point of


view, it seems odd that they should be getting this hand-out of the


state pension? Over the lives of baby boomers, they have seen their


incomes progressively rising but they have also been beneficiaries of


government support as well. They have done well in that sense from


two quarters. Absolutely right, we often think about what will happen


to tax and benefit policies in the next five years, but for a true


intergenerational perspective we need to look across lifetimes. That


is hard, we have to make assumptions about the future but the best


analysis suggests the baby boomers, if you add up all the taxes they pay


in and all the benefits and welfare support they take out, they have


been net beneficiaries of the welfare state, partly because there


was lots of them in working age and fewer retirees ahead of them said


they did not need to pay so much tax to fund the health and care. As they


move into retirement, that starts to shift and it looks like the


generations coming after the baby boomers take much less benefit over


the lifetime from the welfare state or may even be net contributors.


Paying in more than they get out. The ups and downs of generations


connected to the ups and downs of demographics to create an unequal


picture in terms of what the welfare state does for each of them. Let's


ask you about what you made of the Brexit vote in terms of whether it


is revealed in intergenerational divide? The problem is that we have


a divide in how people vote, younger people much more likely to vote for


remain, older people much more likely to vote for the leave. Of


course there were some younger people were voting for leave but


what it highlights is that younger people and older people tend to vote


differently, but the problem is for younger people that the older


generation have more voting power now. The next general election in


the UK, there will be more over 50s voting than under 30s, not only are


there more of them voting but they lobby more, the MPs and the


policymakers are more likely to be baby boomers and so their interests


tends to be treated as less important. That raises a really


important practical challenge, basically two things underlined what


you said: there is quite a lot of baby boomers, they are a big cohort,


but also they are much more likely to vote, this turnout divides did


not always exist, to some extent it did but it opened up in the 1990s.


Our research shows that the turnout among the younger generation fell by


one third in the past few general elections in the UK. We have said


that we don't necessarily think this should be thought of as a war, that


generations want the best for each other but if we make tough decisions


then we need a democratic consensus to doing that. You are a keen


supporter of working past the official retirement age. Work is


changing dramatically and there is no reason why we cannot work, we


work flexibly, we then have a break and take up a new career, or a new


sort of skill. We have two are just very quickly to the new workforce,


and there is really very little in the way of an age barrier to that in


the same way as women and men can now work later, take breaks, come


back, keep learning, keep changing. It is up to employers as well to


make sure that their employees can continue to train and learn and


retrain. Let me ask you, do you have a sense that people in your


generation are planning their lives differently? Do they expect to


re-educate themselves in their 40s or 50s when they become middle age,


is that an expectation, that they will simply have to work longer? Do


you see a difference between you and people in their 50s? There is


definitely something is that members of my generation see differently,


working longer is a part of that. Really big-ticket items, your house,


your pension, what you want from retirement, settling down and having


kids, the really striking thing is attitude across the generations have


not shifted. We may have iPads and be able to travel all over the


world, we may be seen as footloose and fancy free as a generation but


on the important economic milestones, we want the same things,


we want the house, the pension, the stability, we want to bring up


children in a world where growth and progress means they will do better


than we did. That is what binds together the generations. We have


said it is not war, politicians need to pursue those ends for us. Dinky


very much for all of you. That is it brought this edition of


talking business, next week, we will be in Washington for inauguration


special. -- Talking Business. Looking at the challenges ahead for


president Donald Trump.


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